Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories conference call discussing first quarter 2026 results. As a reminder, this call is being recorded Thursday, January 29, 2026. I would now like to turn the conference over to Mr. Peter Goldmacher, Vice President of Investor Relations. Peter, please go ahead.

Good afternoon, and welcome to Dolby Laboratories First Quarter Fiscal Year 2026 Earnings Conference Call. Joining me today are Kevin Yeaman, Dolby Laboratories CEO; and Robert Park, CFO. As a reminder, today's discussion will include forward-looking statements, including our fiscal 2026 second quarter and full year outlook and our assumptions underlying that outlook. These statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today, including, among other things, the impact of macroeconomic events, supply chain issues, inflation rates, changes in consumer spending and geopolitical instability on our business. A discussion of these and additional risks and uncertainties can be found in the earnings press release that we issued today under the section captioned Forward-Looking Statements as well as in the Risk Factors section of our most recent annual report on Form 10-Q. Dolby assumes no obligation and does not intend to update any forward-looking statements made during this call as a result of new information or future events. During today's call, we will discuss non-GAAP financial measures. A reconciliation between GAAP and non-GAAP financial measures is available in our earnings press release and in the Interactive Analyst Center on the Investor Relations section of our website. With that, I'd like to turn the call over to Kevin.

Thanks, Peter, and thanks to everyone for joining us on the call today. FY '26 is off to a good start. Revenue and non-GAAP earnings came in above the high end of the range of guidance. We are making meaningful progress on the growth initiatives we discussed last quarter, and we're raising our guidance for the year. Robert will share more details on the financials and guidance in a few minutes. Just a few weeks ago at CES, we showed how Dolby Atmos and Dolby Vision are shaping how people watch, listen to and enjoy their favorite entertainment content across movies, TV, music, sports and user-generated content. We hosted hundreds of customers and partners at Dolby Live, where we had demonstrations primarily focused on the in-car entertainment experience and Dolby Vision 2 for TVs. Automotive has become a major focus of CES, and we were excited to have partners highlight how Dolby is helping them transform the future of in-car entertainment. Attendees were able to experience Dolby Atmos in cars ranging from a 2-seat Porsche 911 to a Mercedes SUV, an Audi e-tron, and a full-size Cadillac Escalade. We also showed how Dolby is playing an important role in expanding the scope of high-quality entertainment in the car. SmashLabs demonstrated its immersive multichannel games in Dolby Atmos vehicles and attendees got a chance to listen to Audible's fully immersive Harry Potter audiobook series featuring Dolby Atmos. The Neon Horizon featuring Dolby Atmos and Dolby Vision demonstrated how the bar is being raised on the in-car experience well beyond music to include movies, TV, gaming, audiobooks and more. In addition, we announced that we are partnering with Qualcomm to integrate Dolby Atmos and Dolby Vision into Qualcomm's Gen 5 Snapdragon Automotive platform, further extending our reach into the auto ecosystem. Also during the quarter, Mahindra released the first SUV in India with Dolby Atmos and Dolby Vision, and Hyundai launched its first car with Dolby Atmos, a crossover SUV in China. Overall, we continue to be excited about the momentum in automotive, where we now have partnerships with over 35 OEMs, up from 20 OEMs this time last year. Moving on to TVs. Dolby Vision 2 was on full display at CES and was met with enthusiasm from partners, press and attendees. Building on the success of Dolby Vision, Dolby Vision 2 is designed to meet the evolving expectations of today's viewers and unlock the full potential of modern televisions from mainstream sets to top-of-the-line models. Dolby Vision 2 has a variety of features that are designed to enhance all the content consumers enjoy, including movies, sports and gaming with even more vivid pictures and brighter colors. When you see it, it just looks better. We got an enthusiastic response at CES from the content providers with Peacock announcing its support for Dolby Vision 2 across movies, originals and live sports, joining Canal+ as an early launch partner. TP Vision, the maker of the Philips brand, announced support for Dolby Vision 2 across a variety of upcoming models, joining Hisense and TCL as launch partners. The first Dolby Vision 2 TVs will be available by the end of the year, increasing our revenue opportunity from TVs. Additionally, in the quarter, we continue to make progress on our other growth initiatives, including mobile, our video distribution program for imaging patents and OptiView. Meta, which announced support for Dolby Vision on Instagram in November, has now begun supporting Dolby Vision on Facebook. Douyin, the Chinese version of TikTok has been supporting Dolby Vision on iOS and started rolling out support for Android devices this quarter. Content captured and played back in Dolby Vision drives higher engagement for social media providers and in turn increases demand for Dolby Vision on mobile phones. In imaging patents, Roku became a licensee of the video distribution patent pool, marking the first U.S.-based streamer to sign up for the pool. As we discussed last quarter, this pool increases the addressable market for imaging patents by expanding the available licensees from device manufacturers to also include streamers of content. On Dolby OptiView, we continued our partnership with the NFL with OptiView delivering RedZone through the NFL+ app and achieving record levels of streaming quality for the service. And we continue to bring customers onto the service, including Veikkaus, Finland's national lottery and sports betting operator, and SIS, short for Sports Information Solutions, a service provider of about 300 sports betting companies. Veikkaus is using Dolby OptiView to reduce latency for live horse racing, improving the real-time betting experience and strengthening customer engagement. SIS has adopted our video player and has made the ability to deliver content in sub-second latency available to its customers. We're encouraged by how Dolby OptiView is enabling our partners to increase audience engagement and revenue. To wrap up, we have continued momentum in automotive, new growth drivers for Dolby Vision and TVs, and growing adoption of Dolby Vision in social media, an important use case for mobile devices. And while it's early days, we continue to expand our addressable market to new customers with Dolby OptiView and the video distribution program. We're confident in our ability to grow Dolby Atmos, Dolby Vision and imaging patents at 15% to 20% per year over the next few years. And now that Dolby Atmos, Dolby Vision and imaging patents is approaching 50% of our licensing revenue, it is having a greater impact on our overall growth rate. We remain excited about our position in the market and confident in our growth opportunities. With that, I'll turn it over to Robert, who will take you through the financials in a bit more detail.

Thank you, Kevin, and thanks to everyone joining us on the call today. Revenue for the quarter came in at $347 million, above the high end of the guidance we shared last quarter, primarily driven by the timing of deals coming in earlier than expected and a $7 million favorable true-up for Q4 shipments. Non-GAAP earnings per share was $1.06 and also above the high end of guidance, driven by higher revenue and lower OpEx. Licensing revenue was $320 million and Products and Services revenue was $27 million. We generated approximately $55 million in operating cash flow, repurchased $70 million of common stock and have approximately $207 million remaining on our share repurchase authorization. We declared a $0.36 dividend, up 9% from our dividend a year ago and ended the quarter with cash and investments of approximately $730 million. GAAP operating expenses in Q1 included $10 million in restructuring charges as we continue to streamline operations and align resources with our business priorities. Detailed licensing performance by end market can be found on our IR website. As we share with you every quarter, trends are typically smoother on an annual basis as the timing of recoveries, minimum volume commitments and true-ups can drive quarterly volatility. In terms of end market performance for the quarter, it's worth noting that Mobile grew by over 20% year-over-year, and Broadcast revenue was down mid-teens year-over-year, both primarily driven by the timing of deals. We still expect Mobile and Broadcast to be up mid-single digits for the full year. Turning to guidance. For full year fiscal '26 guidance, we are raising the revenue range to $1.4 billion to $1.45 billion. This reflects the Q1 true-up and some of our deals coming in earlier and stronger than forecasted, partially offset by slight revisions to our outlook for the year, including potential impact of memory pricing, which varies by end market and customer. We expect fiscal year '26 licensing revenue to be between $1.295 billion and $1.345 billion, and we are targeting non-GAAP operating expenses between $780 million and $800 million. This guidance implies operating margin improvement of between 50 and 100 basis points. We expect non-GAAP earnings per share to be between $4.30 and $4.45. Our expectations for foundational in Dolby Atmos, Dolby Vision and imaging patents full year growth rates are relatively unchanged from what we communicated at the beginning of the year. With Dolby Atmos, Dolby Vision and imaging patents growing roughly 15% and comprising nearly half of our licensing revenue, we expect foundational revenue to be down slightly. We also expect end market growth rates for the full year to be similar to what we communicated last quarter, with growth in Mobile and Broadcast and declines in PC and CE. For Q2 '26, we expect revenue to be between $375 million and $405 million. Within that, we expect licensing revenue to be between $350 million and $380 million and includes a large recovery that settled in Q2. Gross margin should be approximately 91% on a non-GAAP basis, and we expect non-GAAP operating expenses to be between $195 million to $205 million. Non-GAAP earnings per share is expected to be between $1.29 and $1.44. In summary, we are off to a strong start in Q1, and we are encouraged by the progress we are making across our growth initiatives. Our financials remain solid with organic revenue growth, high gross margins, expanding operating margins, healthy cash flows and a strong balance sheet. With that, we'll open the line for your questions.

Your first question comes from the line of Steven Frankel with Rosenblatt.

So on this notion of some of the upside was driven by deal timing, with deals coming in earlier than expected. Do you read into that? Any change in the environment or customers' sense of urgency? Or this is just the other side of the coin that you experienced over the last couple of years where deals tended to slip?

Yes. Thanks, Steve. I wouldn't extrapolate to any generalization in the macro. I think that we're pleased to have had some of our deals come in earlier. It has the effect of kind of derisking some of the outlook for the year. But things are coming in about what we expected, raising guidance to reflect the true-up in Q1, one of the deals coming in a little bigger and that's all the normal adjustments we typically do as we come into a new quarter.

And on that large true-up, could you help us understand, was that in Mobile and that's part of the Mobile upside? Or was it another area?

The true-up was about $7 million. And Robert, do you want to cover?

Yes, it was primarily gaming and broadcast, Steve.

And the strong growth in Mobile, was that in part due to signing of new deals or renewals that drove that?

Yes, you should consider the end markets for Mobile over the entire year because the timing of deals, recoveries, and minimum volume commitments can vary each quarter. We still anticipate a slight increase for Mobile for the full year.

Okay. And then one big picture question, Kevin, the spin-off of the Sony TV venture into a partnership with TCL, does that present an opportunity over the next couple of years for you to gain some material share if Sony ends up behaving like TCL, where you're basically on every SKU?

Yes. I mean I don't want to comment on their pending transaction or where they might go with it, but we have very strong relationships with TCL. We also have a strong relationship with Sony. So they're both good partners. And of course, we're really focused across the board on increasing attach for televisions and yes, we're very excited about Dolby Vision 2 and the reception it got at CES from content providers, OEMs, really everybody who came by and we're looking to bring those first Dolby Vision 2 televisions to market by the end of this fiscal year. So as we go into next year, that's when we see that adoption cycle beginning, and that's a good opportunity for us as adopting Dolby Vision 2 for those who already have Dolby Vision, that's increased royalties. But we also think that it's a real opportunity to bring Dolby Vision 2 and the Dolby experience to those midrange TVs because there's a lot of discrete features of Dolby Vision 2, which upgrade the experience. But when you see two midrange TVs again at CES, we had a $300 TV side by side, it's just significantly better. So we're excited about that as we approach the end of the year here.

Great. And one more quick one for Robert. Cash flow generation, this Q1 looked more like Q1 of 2024 than 2025? Is this just timing and we shouldn't read anything into it? And the expectations for full year cash flow generation should be what we're used to?

Yes, that's a good question, Steve. Our cash flow, especially operating cash flow, can vary from quarter to quarter based on deal timing, terms, patent pool collections, and distributions. To better understand this, you can review the past four quarters, which closely align with our non-GAAP net income. The trailing four quarters reflect that it's approximately 100% of that figure, and we expect this trend to continue for the year. Therefore, if you want a reliable indicator of operating cash flow, consider our non-GAAP net income as a good reference point.

Your next question comes from the line of Ralph Schackart with William Blair.

Kevin, maybe if you could just give us an update on the new sort of patent pool monetization strategy. I think last time on the call, you said it could be 10% of revenue from a collection made within three years. Just maybe kind of confirm if that's still the current view? And maybe more importantly, Roku is obviously a nice customer to have. They're largely $100 million or so active accounts. Maybe kind of give a sense of after you have Roku here, how those conversations progress as you look to commercialize with other partners? And then I think there might be some discounts available, if I'm not mistaken in the market up until mid-year, maybe June 30 from recollection. And how is that sort of influencing some of the conversations you're having along those lines?

Thank you, Ralph. To start with the mention of the 10%, we are excited about the chance to broaden our market to include content service providers. For the past 60 years, we have provided technology expertise and experience to content creators, distributors, and OEMs, focusing on monetization at the OEM level. We are introducing new value in areas that benefit content service providers, especially through a consumption-based revenue model. This includes our video distribution program, which is reported under image patent licensing, and Dolby OptiView, which is expected to contribute 10% of revenue from content service providers over the next three years. Regarding the video distribution program, we initiated this because of the growth in the streaming industry and the understanding that modern video codecs are essential for these providers' success. The program has begun well, with a few licensees, including significant ones in China. Recently, we signed our first U.S. streamer, Roku. We've seen many patent pools develop over time, and we are encouraged by the progress and engagement in the industry. You seem to have done some good research; there are indeed pricing incentives from the pool to encourage early sign-ups.

Great. Maybe just one for Robert. Just in terms of the guide being at the high end, was that just a combination of good stuff going on in the quarter as well as the favorable true-up? Or was that maybe tilted a little bit more in favor of the favorable true-up getting the revenue to come in towards the high end of the guide? Just trying to get a sense of that.

Are you talking about the full year, Ralph?

For the quarter, yes.

The quarter was the $7 million of favorable true-ups and deals coming in earlier than expected, as we talked about before in terms of the performance for Q1.

Yes, Q1 is the $7 million of favorable true-ups and deals coming in earlier than expected, as we talked about before in terms of the performance for Q1. I'm sorry. I thought you were talking about guidance.

No, I said guidance, but maybe just give a sense outside of NVIDIA favorable true-up and how about the expectations of the quarter?

Yes. I would say it's fairly small. It's nice that it's favorable in terms of units being a little higher than we estimated for last quarter. But the deals coming in earlier than expected can ebb and flow, but it's always nice to have them in earlier. As Kevin said, it does derisk our pipeline for the full year and gives us a little more confidence about our ability to execute for the rest of the year. But I'd say other than that, it's pretty close to what we thought it would be, and that true-up, of course, is something we don't plan for. So that's more so for the full year.

Your next question comes from the line of Vikram Kesavabhotla with Baird.

I guess I'll start first on CES. I'm curious if you can just talk more about your takeaways from the event this year. Obviously, you talked about all the demos that you had available there. I guess what was some of the feedback from the partners and customers throughout the event? And what do you think resonated the most from some of your latest innovation?

It's a great opportunity for us to connect with partners across our ecosystem. We had OEMs, content service partners, and content creators visiting us. Our space at Dolby Live is well-equipped to showcase the Dolby experience, making it an excellent chance to highlight what's new, particularly our focus on the automotive in-car entertainment experience with Dolby Vision 2. This also allowed us to discuss their perspectives and opportunities for collaboration. We welcomed hundreds of customers and partners, primarily focusing on the automotive experience, which generated a lot of excitement and showcased a wide range of cars and use cases. We also introduced Dolby Atmos and Dolby Vision in cars. Our initial focus was on music in vehicles, but we now offer a comprehensive in-car entertainment experience that includes gaming, TV, movies, and audiobooks, all of which are appealing for our Atmos partners. Dolby Vision 2 has received positive feedback, and many more people were able to experience it. The excitement is palpable, and we're diligently working with our partners to launch the first TVs by the end of this year, which will help expand our market presence. Overall, it was a fantastic event for us.

Okay. Great. And then I also wanted to follow up on some of the recent announcements that you highlighted in the press release. So first on Peacock, you said that's the first streaming service to integrate your full suite of premium picture and sound innovations. Could you talk more about the significance of that announcement? I mean, what do you think moves the needle in that conversation with Peacock? And what does this mean for your future relationships across the streaming landscape? And then similarly, you also highlighted Meta now supporting Dolby Vision on Facebook following the announcement on Instagram recently as well. I guess, could you talk more about how that's influencing your broader efforts in social media and your discussions with the mobile OEMs? And I'll leave it there.

Thank you for the question. Peacock has announced its adoption of the full suite of Dolby technologies, including AC-4, Dolby Atmos, and Dolby Vision 2. They are one of our first launch partners for Dolby Vision 2, which will be available when new TVs are released later this year. This partnership spans movies, TV shows, and sports, and they have started using Dolby Atmos, allowing viewers to experience events like the Super Bowl and the Winter Olympics in this format through Peacock. We're truly excited about their commitment to the complete Dolby experience. Regarding Meta, we shared last quarter that they adopted Dolby Vision for Instagram on iOS and have now expanded support to Facebook. This is important for us because mobile devices are a primary use case, and being able to experience Dolby Vision on popular social media and video-sharing platforms creates demand for Dolby on mobile. Additionally, we mentioned last quarter that Douyin in China started supporting Dolby Vision and is expanding it to their Android users, which is a significant development. We are thrilled about our relationship with Meta, as they have embraced Dolby Atmos and Dolby Vision on the Oculus headset. Engaging with them across various aspects of their business presents great opportunities for us to explore how we can assist in future endeavors.

Your next question comes from the line of Patrick Sholl with Barrington Research.

Maybe just another question on the guidance. Can you talk about whether on the foundational of the Atmos and Vision side of things? Just how you're seeing OEMs respond to any kind of the macro issues, whether it's on tariffs or on memory in terms of how they're kind of adjusting their time shipment views?

Yes, thank you for that. I believe everyone is attempting to find clarity amidst the current complexities, as there's certainly a lot happening. Regarding our adjustments, there were no significant changes, but we do revise our outlook each quarter. Memory pricing is a particularly hot topic; while it wasn't a major adjustment for us, we did raise guidance due to some strengths in our pipeline and adjustments made. The Mobile end market appears to be the most affected, with variability among customers. Some have engaged in forward purchasing or other strategies to mitigate impact, and much of our Mobile business relies on minimum volume commitments, so the timing of renewal cycles is also relevant. Overall, the impact is not material, although some adjustments were made. In terms of TVs, memory represents a smaller portion of the bills of materials, so we don't anticipate much impact there. Another area we've noted more chatter about is PCs, which Robert identified as a market where we expect to see a decline this year.

Okay. You mentioned in the press release the ongoing adoption progress among audio manufacturers. I'm curious if changes in U.S. policy are having any effect on this, particularly related to electric vehicles and their influence on the adoption of different in-car features?

Due to the current stage of our opportunities, which include gaining numerous new wins and models, we have not experienced any noticeable impact. This area remains our fastest growing segment, alongside licensing. Additionally, we are starting to see more geographical diversification. Initially, we had strong momentum in China with electric vehicles, but we have since expanded to companies like Mercedes, Audi, Porsche, and Cadillac, as well as the top three manufacturers in India. We are also beginning to see more gas-powered vehicles incorporating Dolby Atmos. As of now, that has not been a primary focus for us. We are dedicated to partnering with more manufacturers to deepen their offerings. Furthermore, we are excited about the opportunity to enhance the complete in-car entertainment experience with Dolby Vision and the wide range of content that people will enjoy while driving.

Ladies and gentlemen, that does conclude our question-and-answer session, and that does conclude today's conference call. Thank you for your participation, and you may now disconnect.